FSA chief executive Hector Sants has admitted that consumers pay little attention to the detailed information they are given when they buy financial products.
Speaking at the British Bankers’ Association international banking conference in London last week, Sants said people lack the technical skills to understand the material.
He said: “The FSA’s approach in the past has been to ensure disclosure of risk and information to consumers. Experience shows, in practice, consumers pay scant attention to the material provided to them at the point of sale. In any case, they lack the technical skills to evaluate the information.”
Axxis Financial Planning director Owen Wintersgill says: “It has always been obvious that the amount of difficult information in these disclosures ends up bamboozling many clients and they can end up oblivious to the risks without the appropriate guidance of an IFA.”
Facts and Figures managing director Simon Webster says: “Is this a sick joke? If the FSA knew people did not read it, it should have got rid of it earlier. It is a waste of time and money.”
Sants told the conference that the payment protection scandal was a “missed opportunity” to restore consumer trust in the banks.
He said: “A restoration of trust requires a visible step-change by you, the banks. In my view, PPI was a missed opportunity to demonstrate your intentions. I urge you to take the next one.”
Sants added that the move to the new regulatory structure required change in the attitudes of both banks and regulators.
He said: “Unless we all change all aspects of what we do, real change will not be achieved.”